Risky Business: Intra-Firm Trade with Foreign Commercial Risk and Asymmetric Insurance

Gerda Dewit

Working Papers from Business School - Economics, University of Glasgow

Abstract: A partial equilibrium model is used to examine the international production allocation of a two-plant risk averse multinational firm which is confronted with uncertainty with respect to foreign sales. The firm has price-discriminating monopoly power in both markets and uses specific factors in both plants, producing an identical good. We focus on the question how unequal insurance facilities in the firm’s home and host market influence the firm’s international production decision and its level of intra-firm trade.

Keywords: multinationals; uncertainty; export insurance; intra-firm trade (search for similar items in EconPapers)
Date: 1998-03
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Persistent link: https://EconPapers.repec.org/RePEc:gla:glaewp:9808

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